Fortune projects "a generation or so down the line, it is India that is going to be the Asian tiger that everyone watches."

Much as I would like to see it, I think there may be a big gating factor.

Fortune and other Westerners forget that we have, for the most part, political AND economic democracy. India does have a political democracy (a vibrant one, and an active press to boot), but it does not have an economic democracy. While the middle class has grown nicely in the last decade or so, the poor keep on growing.

For all the continuous improvement and Six Sigma focus of the Indian software industry, there is a Hindu perspective on accepting the way "things were meant to be". That will continue to create lop sided growth and its own set of significant tensions.

We should continue to beat up China for its lack of political democracy, but I would suggest it will have a much more of an economic democracy in a generation.

A few years ago, I accompanied a couple of Japanese visitors on a flight which took us over the plains of the US. Every so often they would look out and shake their heads. They later told me they were so jealous of all the land we had. The unsaid message was you guys could do so much better with the huge advantage you have.

I see the traffic on this ARmadgeddon blog. An anonymous post critiquing a firm. The firm responding (with a name and contact info) "not our policy to engage in debate on anonymous blogs". Then a commenter criticizing the previous gentleman for not debating while themselves remaining anonymous. And these are all professionals in the tech community, not some young kids on MySpace.

And I thought to myself what would a Chinese or Iranian blogger think of this? He would be so jealous of our freedoms and just shake his head on how we in the West waste it on, pardon my language, chickenshit...what are we afraid of in the tech world to disclose who we are and engage in open debate, compared to what they face?

"Follow our 12 step program and break free from professional services codependency" says the cover of InfoWorld.

My initial reaction was "here we go throwing the baby with the bathwater". Variable staff sourcing - employees, contractors, systems integrators, offshore firms, etc are part of every company's talent strategy. Lord knows I am hard on IBM, Accenture, Infosys and others on this blog but the virtuosos I know keep pushing the envelope with SaaS, utility models, leveraging communities - not going out and hiring more full-time employees.

The article, though, is far more benign than the cover page. Fairly blase recommendations like "Hire only the expertise you need" "Don't use a consulting firm to do day to day tasks". (My question to last point is why not? Let them do the mundane utility stuff if the price is right - save your employees for the innovation stuff)

It is a sad commentary on the image of the services market though that a major IT publication runs a cover story on the topic and calls it an addiction.

I recently previewed excerpts from a book my former Gartner colleague, Bill Hopkins is writing titled "Influencing the Influencers". It is chock full of data on the analyst industry (Gartner, Forrester, AMR, Yankee etc) and should be a great read when it comes out. Bill's company KCG advises vendors on that art of influencing analysts.

What struck me was an episode which "made" Gartner in its early days.

"The Hartford,
one of Gartner’s earliest user clients, called (David) Stein seeking some last minute advice
in the fall of 1980. Turns out, an IBM salesman was sitting in the CIO’s
office. He was holding out a contract that would convert four 3033 mainframes
from lease to purchase. “Do whatever you have to do, but do not let him sign
it,” Stein told the CIO’s secretary over the phone. “You’ll be very sorry
because those prices will drop 30% within a matter of a few weeks.”
Fortunately, she got the pen away from her boss. And, as predicted, the prices
dropped steeply – saving the insurance company $4 million. “Now, we had a
reference sale like you can’t believe,” adds Stein. “Well, we were able to do
that all over the country ...

... Indeed, the goodwill that Gartner created
with end users during this period arguably set the stage for its rapid growth
in the 1990s and continues to be reflected its dominant – deal making and
breaking – position today."

So, made me wonder would Gartner (or Forrester or any of the analyst firms) do that for a buyer today, given their much larger vendor revenue stream? And if they did, would they proudly talk about it like David does above?

The analyst firms do have negotiation advisory services. But they are relatively small compared to their vendor revenues - and often hidden away to avoid conflict with vendors. Trust me the negotiation groups are small - only scratching the surface of price leverage being opened up in different technology spend - from the impact of Open Source, SaaS, third party maintenance, offshore delivery, rural staffing, VoIP, hardware as a service. Gartner could be saving many of its clients $ 4 m a year in each of these areas

Of course, economics are not everything. But stretch the analogy - how likely is a Gartner analyst to call a client back and say our report said neutral things about a certain vendor's new product - actually here's the skinny - DO NOT SIGN THAT CONTRACT.

And vendors are clients too. They need advice, they need TLC. But many analysts will quietly complain that vendors watch them like a hawk
and use their client privileges for influence more than intelligence. Most analysts I know try to stay independent, but the sales people in the analyst firms have little incentive to and subtle pressure invariably seems to apply. Add to that the fact that vendors are individually much bigger clients for the analyst firms than even the much larger user organizations - the GEs and Wal-Marts and it makes for a complicated world when you need the revenues to keep the Street happy.

But it is a slippery slope. Buyers are turning to peers, specialist advisers, even blogs for more independent feedback. As buyer influence shrinks steadily, why would vendors keep paying the big bucks to the analysts?

When you have delighted buyer clients like The Hartford above, vendors may not always like it, but they have to respect that influence. They did in 1980. They do even today.

a) When will offerings like amazon's new Compute Cloud be viable for corporate versus free- agent developer usage?b) So SaaS pricing includes hosting, bug fixes, tuning, upgrades - and the application licensing? Can we terminate our current infrastructure and application maintenance outsourcing and move to a SaaS vendor?c) Can you find us an alternative vendor which does away with time zone, travel and communication issues with our current one?

It is well written, but I cannot help but think it presents such a placid, even dated, view of the outsourcing market.

Just under the surface there are so many other evolutions going on:

Cannibalized application hosting and maintenance a la SaaS vendorsHardware as a service by vendors like Sun and amazonBeyond single country delivery to multi-country - truly "Global" delivery modelsEmergence of near shore and rural delivery centers as alternatives to long distance delivery from India, China, Philippines.Understanding of how to leverage developer "communities" - amazon, SAP's SDNThe short putt from SaaS to BPORe-engineering of the outsourcing supply chain

The "best practices" the Booz Allen article describes are a helpful catalog. But the outsourcing "virtuosos" I know are looking way beyond them.

There a revolution brewing in the software world. But there are lots of factions and hard to see who the revolutionaries and royalists are

Some of the factions I have seen just in the last week:

a) I defend the CIO here and here but question incumbent vendor models. The new world of Enterprise 2.0 cannot just be a Web 2.0 layer on top
of Enterprise 1.0, but needs to fix a number of things wrong with incumbent vendor models.

b) A camp questioning the entire current IT establishment (CIO AND incumbent, status quo vendors) - some of the reader comments on this blog

"There's a growing camp of believers in the Enterprise 2.0 story that
personally don't care what the CIO is interested in because the CIO is
not their target. It's an LOB sell with a liberating story for
user/knowledge workers."

"The view that CIOs are docile sheep getting squeezed by the megavendors
is simply disingenuous. It takes two to tango. Talk is cheap, many CIOs
will continue the current state of few vendors and megabudgets (putting
in complicated systems from megavendors) and push systems to users
because it suits them."

"
1. Is the CIO in a position to take on the mantle you suggest?
2. What about the incumbents rotting from within with their outdated
data centric, inflexible models in a world where flexibility and
agility are the order of the day?"

c) The Office 2.0 view of the future "Imagine a computer that never crashes, or gets infected by a virus.
Imagine a computer onto which you never have to install any
application. Imagine a computer
that follows you wherever you go, be it at school, at work, abroad, or
back home. This
computer does not exist today, but it will in the future, and this
future might be much closer than you think."

d) Defenders of the status quo vendors question "weak" emerging alternatives or say there really is not much new. Thomas Otter calls out emerging HR/job board functionality. Rod Boothby calls web alternatives to MS Office a "niche" even as he signs up to present at the Office 2.0 conference. Nick Fera - "Business users have been doing this very thing over and over again for
many years (thus the "20.0"). Look at e-mail, chat solutions, IM. All
of these were available publicly and used long before corporate IT ever
deployed a single line of code for any one of these solutions. There's
nothing new about the process of Enterpise-readying new software
applications, just the name. The key is what's necessary to make them
suitable for businesses."

e) Status quo vendors even question their current patrons, the CIOs. Charles Zedlewski of SAP in a comment on his blog "I also don't care if CIO's see art or passion in a great software
product. That doesn't affirm or negate its greatness. If they refuse to
pay money for it, well that's a different story."